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How do bonds effect the market?

Discussion in 'Trading' started by pumpkinhead, Jan 29, 2007.

duard
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Quote from marketbarometer:

Think about what the world revolves upon, credit and loans. Lower bond market prices lead to higher yields. Higher yields lead to greater loan payments across the entire spectrum.

As a result all entities that take out a loan or have a line of credit will have a greater payment.

This cuts into the buying power of the consumer, the margins of a business, etc. Its a disaster for homeowners or soon to be homeowners as they might have to deal with a higher mortgage payment. A person looking for a car might reconsider keeping their old one if the loan payment is too high. They might reconsider other discretionary purchases as well from TVs to computers to going to McDonalds. etc.
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...and that my friend is why the bears shall soon have their respective days in the equities markets.

#11 Jan 30, 2007

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